After the return of economic growth, few now recall that the next government, whether Conservative or Labour, will implement some of the most severe cuts to public services in modern history. That these reductions are likely to take a place at a time of rising prosperity and after some departments have already been cut by 25 per cent, will make them even harder to defend.
The speech today by shadow chief secretary to the Treasury, Chris Leslie, Labour’s axeman in chief, was a reminder of the challenges the opposition will face. If it is to meet its pledge to eliminate the current deficit by the end of the next parliament and to reduce the national debt as a share of GDP (while leaving room to borrow for capital spending), Labour will have to make major cuts to these services it does not choose to prioritise (expect the NHS, childcare, skills and employment to be favoured).
As Leslie said in his speech:
I’m not heading into this expecting popularity. Quite the opposite.
All government departments in the next Labour Government will have to face fundamental questions as never before.
We won’t be able to undo the cuts that the have been felt in recent years. And I know that this will be disappointing for many people.
A more limited pot of money will have to be spent on a smaller number of priorities. Lower priorities will get less.
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The key policy announcement was that Labour would not hold one-year spending reviews of the kind recently introduced by George Osborne (almost entirely for political reasons), instead always setting budgets on a multi-year basis. In turn, Whitehall will be expected to provide public bodies and organisations under its stewardship with the same longer-term certainties. Leslie criticised instances of “short-term budget decisions that cost more in the long run”:
· “The closure of fourteen prisons at the Ministry of Justice, creating a shortage of capacity and provoking Ministers to later change tack and commission new ‘Titan’ prison projects which appear unfunded and may even worsen re-offending.
· “A decision to withdraw the A14 upgrade in 2010 as “unaffordable” at £1.3 billion – yet the resurrection of the same scheme in 2013 now costing £1.5 billion.
· “The roads maintenance budget for local authorities cut by a fifth in 2013, followed by an about-turn in 2014 with a complex ‘Potholes Challenge Fund’ assessed by Whitehall civil servants on the basis of bureaucratic bids submitted from town halls – hardly progress towards localism.
· “And not forgetting the bedroom tax, which not only causes great hardship but merely shunts costs from local authority housing benefit and into the more expensive private rented sector element of housing benefit.”
But the most intellectually notable part of the speech was Leslie’s attempt to make the progressive case for deficit reduction. As he argued, it is those on the centre-left, as the champions of a social democratic state, who have a duty to prove that they are fiscally responsible. The belief that the public sector is invariably wasteful gives the right the licence they need to permanently roll back services.
He said:
Why does it matters so much to get the books into balance?
Because if you believe that as a society we achieve more by coming together and pooling our resources to deliver services from which we all benefit, then we have a responsibility to prove to the taxpayer that this can be done efficiently and effectively.
Public service budgets have got to be sustainable.
We need to continually demonstrate to taxpayers that they can trust the public realm to manage services well.
The alternative risks eroding public confidence and an opt-out culture of private provision for those who can afford it – and sub-standard services for the rest.
There’s no reason why we cannot create decent quality services and a fair society while living within our means.
This is why I believe those on the progressive centre-left of politics should embrace the goal of balancing the books. There is nothing left-wing about running a deficit.
If Labour is to avoid an internal war over cuts in the next parliament, it is an argument he will have to make repeatedly.
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